Ask the Expert: Your Business & Economics Questions Answered

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The worlds of business and economics can be confusing to those who don’t speak the language. So TIME.com is launching a new series that tries to break down that barrier. You ask the questions, and we will answer the ones that are the most timely and likely to be of broad interest. Ask your questions in the comments section of this article, or write to us at asktheexpert@time.com. TIME’s writers and reporters, including Rana Foroohar and Bryan Walsh, will answer your questions online and in print, beginning on March 1.

So please, ask away!

68 comments
jrodger
jrodger

Martin Feldstein stated in the June 18 Time magazine the following:

   The Fed fears that the financial markets will react to rising short term rates by pushing up long term rates, widening credit spreads and reducing equity values.


Could you put this into clearer language exactly what is happening here?

danielawilliams
danielawilliams

This question may need a lot of clarification but i wanted to know about money circulation. With the money supply now being only 3% cold hard cash and the rest digital I read a lot about people saying this is a bad thing. The obvious reason being because of the fractional reserve banking system. But actually where cold hard cash 50 years back was accounting for almost half the money supply, because of seniorage this meant the government could at least earn even if they were printing more cold hard cash. With money now being digital is the main problem aside from fractional reserve, the fact that the money that used to be made through seniorage is now being made by private companies who run the chip and pin systems?  

noore
noore

Hi, can you please tell me whether a booming stock market is good for the economy.

SrikerCh
SrikerCh

can anyone plaese say about cost function in it sector and factors dependind on it?

shawnngee
shawnngee

Hi! I am a high school senior from California and after learning more about the US monetary system I have some questions that I am not sure who to ask and none of my teachers have provided me with satisfactory answers and this seemed like the best place to go to. I will appreciate your responses. 1. Who exactly are we in debt to? 2. How could we possibly be in debt if all the money in America is fiat money and not backed by anything? 3. What exactly is the consequence of going too much into debt? 4. How could one possibly even contribute to lessening the debt? Isn't it basically an impossible endeavor? Why is it still hung over us then? Once again thank you for the input. -Shawn Gill 

ChanokpornSophonkiattikun
ChanokpornSophonkiattikun

what exactly are roles of central bank and government? How independent should the central bank be in management of macroeconomics? Does this related to classical and keynesian theory in which if the central bank have 100% independence then we are using the classical method yet if there is government intervene we are using keynesian's ?

please explain. 

FidanAliyeva
FidanAliyeva

When the U.S. Department of Commerce computes the nation’s 

GDP every three months, it also computes various other 

measures of income to get a more complete picture of what’s happening in the economy. These other measures differ from GDP by 

excluding or including certain categories of income. What follows is 

a brief description of five of these income measures, ordered from 

largest to smallest.

•  Gross national product (GNP) is the total income earned by a 

nation’s permanent residents (called  nationals). It differs from 

GDP by including income that our citizens earn abroad and 

excluding income that foreigners earn here. For example, when 

a Canadian citizen works temporarily in the United States, her 

production is part of U.S. GDP, but it is not part of U.S. GNP. (It is 

part of Canada’s GNP.) For most countries, including the United 

States, domestic residents are responsible for most domestic 

production, so GDP and GNP are quite close.

•  Net national product (NNP) is the total income of a nation’s residents (GNP) minus losses from depreciation. Depreciation is the 

wear and tear on the economy’s stock of equipment and structures, such as trucks rusting and computers becoming obsolete. 

In the national income accounts prepared by the Department 

of Commerce, depreciation is called the “consumption of fixed 

capital.”

•  National income is the total income earned by a nation’s residents 

in the production of goods and services. It is almost  identical 

to net national product. These two measures differ because 

of the statistical discrepancy that arises from problems in data 

collection.

•  Personal income is the income that households and noncorporate 

businesses receive. Unlike national income, it excludes retained 

earnings, which is income that corporations have earned but 

have not paid out to their owners. It also subtracts indirect business taxes (such as sales taxes), corporate income taxes, and 

contributions for social insurance (mostly Social Security taxes). 

In addition, personal income includes the interest income that 

households receive from their holdings of government debt and 

the income that households receive from government transfer 

programs, such as welfare and Social Security.

•  Disposable personal income is the income that households 

and noncorporate businesses have left after satisfying all their 

obligations to the government. It equals personal income minus 

personal taxes and certain nontax payments (such as traffic 

tickets).

Although the various measures of income differ in detail, they 

almost always tell the same story about economic conditions. 

When GDP is growing rapidly, these other measures of income 

are usually growing rapidly. And when GDP is falling, these other 

measures are usually falling as well. For monitoring fluctuations in 

the overall economy, it does not matter much which measure of 

income we use.




All above are from mankiwbook(GDP)                     They always give an example and make them easy for us, but this time not. that is why I got crazy because I tried to learn them by heart,(which did not work) but could not apply them to problem set.could you give me simple examples for each of them.(please make clear some tricky points.

Linear
Linear

If the production function is q= 3K + 2L +50, how do you calculate the returns to scale?

idontplaygames10
idontplaygames10

why did banks make poor lending decisions? why did their attitude to risk become reckless?

atmousa
atmousa

Q: Suppose you are developing a model to explain savings behavior as a function of the

level of interest rates. Would you rather sample during a period of fluctuating interest

rates or during a period of stable interest rates? Explain.

aeoluxsana
aeoluxsana

Does an increase in Real Effective Exchange Rate increase or decreases international competitiveness for the country?

thelethalweapon_12
thelethalweapon_12

please help me answer this question 

Country W is a small island nation in Asia, whose native population is growing at 5% a year. The main town is situated in the south of the island and is growing fast, as many jobs are based there. The country is a popular tourist destination and beach resorts are located in the coastal areas. Several big hotel chains have built hotels and there are others that would like to buy land to build all-inclusive leisure resorts, with numerous facilities for guests. Apart from tourism, the main industry is fish canning and a large factory is situated in the west of the island. The fishing boats bring their catch into the small port and much of the canned produce is exported to Europe and the US.


q1.Explain why resources of the island need to support more people than just the native population.

2.Identify and explain TWO examples of scarce resources mentioned above.

3.Using the information given, identify and explain TWO examples of natural resources that are being used by the people of Country W.

4.Analyse what sacrifices, in terms of resource use, may need to be made if the government of Country W wants to increase tourism.

chen
chen

Please help me to understand this perfect monetary system.

Let's say in a simple world, we have 3 persons, a banker, a businessman and a worker. Then we apply the current monetary system in this economy. So for the system to get started, we need a banker to create money for this economy. The banker lends the businessman $120 (money created out of thin air) for 1 day with 10% interest to start a business to make food for everyone. (As you can see the total population is only 3). The businessman hires the worker to make food from whatever source for $40 wages. (Let’s assumed the production can supply more then 3 persons) Then the businessman sells the food in the market for $40 per meal. Obviously everyone needs to eat so the banker and worker will buy 1 meal each. The businessman himself gets the meal for free of course. In the end of the day, here is the accounting for this economy:

- The businessman started off with $120, he paid $40 wages and made $80 from selling the food. Therefore his net worth was $160.
- The worker earns $40 and spends $40 for food. (Balance $0).
- The banker didn't have money to buy food, so he "created" the money to buy food for himself. Therefore in total he had created $160 for the economy.
- The businessman has to pay the banker back the principal $120 + interest $12. So his net worth now is $160 - $132 = $28.
- The banker made $12 after cancelling offs the debt $120. So he took $12 to offset $40 he spent earlier. Therefore he left with $28 in debt which is exactly the balance of the economy.

Questions:
1. With this simplest model of economy, can I say that money creation (or quantitative easing) is nothing wrong at all?
2. Let's assume that the banker is also the government, if the economy is well managed, isn't the government always be in debt for the sake of public interest?
3. If the above is true, can we say that a government with surplus in accounting would mean poverty in public? (For example, if the banker would have collected income tax say 20% from the worker, he would not have enough to buy food. Of cause instead of becoming poor the worker could also ask for a pay rise in order to make a living. But that would affect the businessman's income too.)
4. A super well managed economy will leave no one in excess/lack of money but fulfil the need of living which is goods and services that everyone gets to enjoy. (For instance if the food price was $12/meal and wages was $12, then everyone including banker will have zero bal. Isn't this a perfect economy?

Bakky
Bakky

PEST analysis on the UK car industry and evaluate the various strategies that the business might pursue

JohnPura
JohnPura

supply side economist argue that the government should regulate the supply import.


please discuss this thing.


SabinaRodricks
SabinaRodricks

From the economic point of view, India and China are somewhat similar: both are huge, low-wage countries, probably with similar patterns of comparative advantage, which until recently were relatively closed to international trade. China was the first to open up. Now that India is also opening up to world trade, how would you expect this to affect the welfare of China? Of the United States? (Hint: Think of adding a new economy identical to that of China to the world economy.)

dalia.adelfayek
dalia.adelfayek

Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that: 
A. The supply of clothing has grown faster than the demand for clothing.
B. Demand for clothing has grown faster than the supply of clothing.
C. The supply of and demand for clothing have grown by the same proportion.
D. There is no way to determine what has happened to supply and demand with this information.

the answer is B, but why ?!

betsey
betsey

changes over time in the average height of a country's citizens are used as a measure of the country's living standards because height reflects what?


BrandonMitchell
BrandonMitchell

Okun's law tells us that for every 3 point improvement in GDP, we can expect to see unemployment drop by 1 percentage point.  If unemployment is 7% now, how long will it take at current rates of GDP growth, for U/E to return to 5%?

jenina
jenina

The discipline of economics is the study of the distribution of scarce resources among competing consumption entities.  If you take this statement to be true, can the discipline rationalize a Giffen good? 

augustustom
augustustom

A consumer survey firm reports to a local phone retailer that the estimate of the cross price elasticity of demand between the Samsung and Apple device is approximately 1.6, it is also estimated that the income elasticity for Apple is 0.6 and for Samsung 0.2.
The retailer’s price of the Apple device is £1000 per unit with sales of 1000 units per month
The price of the Samsung device is £500 per unit with sales of 2000 units per month
The price elasticity of demand for the Apple device is estimated to be -3.
Questions
a.What would be the effect on the revenue and sales of the retailer for both the Apple and Samsung devices if the retailer decided to cut the price of the Apple device to £750 per unit?
b.Would you recommend the Apple device price cut to the retailer?
c.If it is predicted that national income is likely to fall by 2% over the next year, would that change your answer to b)? Use calculations to support your answer.  


please help me with question I don't know how to answer this..

sachin2101
sachin2101

how the recovery of loans in government books causes a reduction in the assets

normanj713
normanj713

How can the Federal Reserve extend credit to someone, or a firm, without the consent of Congress?

cheesestickstastegood
cheesestickstastegood

Our brand is growing at 6%. The category is growing at 2%. Our brand is growing at 3 times the category (easy math, right?!)

What do I do if:

1.  Our brand is growing at 6%.  The category is declining at -2%.  Is our brand growing at -3 times the category?!  Is there a better way to say this?

2.  Our brand is declining at -6%.  The category is flat at 0% growth.  Our brand is declining at ____ times the category?

3.  Our brand is decling at -6%.  The category is growing at 2%.  Is our brand growing at -3 times the category?  Again, is there a better way to say this?

anushmita203
anushmita203

i want to know about the recent policy changes of supply side economics in india

Alexth'doglvr
Alexth'doglvr

How does the role of the government affect each market structure: perfect competition, monopolistic competition, monopoly and oligopoly, ability to price its products?

kadenkyi
kadenkyi

I want to find the productivity of various products and services, with different units into a common unit like case. How can i go about it. An example is to quantify the unit of different products in different firm and convert all these products into one single unit which is case to be able to calculate its productivity

memzy
memzy

over what range of workers is there increasing marginal returns?

foofoo
foofoo

I need your help please?I am working in food services at Bahrain university as apart timer student. my boss asked me to do a report about making plans to reduce the prices of food , since the students are not satisfy about the restaurants available in our university prices they thing that it's to high ....so i need some suggestions that we can do it to make them stop complaining ? and make the restaurants reduce their prices 
sorry for my bad English !!

gabrielle.lewis12
gabrielle.lewis12

Why are there always two different theories of what could happen with each economic policy?And why is one always wrong?

For example...
When tax rises, you would have thought demand would fall so firm's would have incentive to lower prices? Or they could sustain prices but reduce supply? WHICH ONE?

AND...
The Wealth Effect: if tax increases, this raises prices and so firm's feel more confident about their value of stock but wouldn't this cause a demand fall? But then there's the theory that prices of ALL substitutes will rise too so demand can't fall too much. Or if it's an essential good (like salt), demand won't fall.

Soooo confusing?!!

Shalabh Tayal
Shalabh Tayal

Stock markets depend on many factors. Speculation or real, whatever makes you money, the markets react. For example, the recent flood in south asia sky rocketed the prices of hard drives, as most of the factories are there. Shares plumet, but the prices move up. Its all about demand and supply.

Parveen Banderker
Parveen Banderker

For economies in trouble: why can't they just print more money?

Timasha
Timasha

I am a research assistant from Sri Lanka. I am currently following market research of Air Conditioning in Bangladesh, trying to angle the competitiveness through the Porter's Diamond. I tried searching the internet to find information about it, but could't find any sound info. Please could you contact me through e-mail and let me know all the details relevant to the said topic? I am having  a deadline as of 24 hours time. Please give sufficient details. This is only for research purposes and nothing violating the laws of said countries. Thank you.

Somya Gupta
Somya Gupta

Why does market points fluctuate so much? Like almost every nanosecond! I know that people are buying and selling shares all the time. But never really understood how it is so quickly affected by natural disasters and so many other seemingly unrelated events?

Josh Carr
Josh Carr

I'd buy a helmet and priest mask so I look like a Hacker. A capitolized word as spy bring we fish kiss so be nice. A long swim can realy wear you tired. Watching Furngully but we had to say our time.

Josh Carr
Josh Carr

If we're all wrapped in words shouldn't we get infinate electricmoney cards?! I mean we're just laughing here. A face iz so funny and beautiful. A story answered as life unwrapps her.

Teuta Abazi
Teuta Abazi

As math deals with formulas to solve the problems in the need of the language for all, these who pretends that know the language are followers of an predictable formula: "IT"S LIKE THAT."

Annie Paphanchith
Annie Paphanchith

well dear itd be easier if u were a female living in a "dudes world" hehe. dudes r so simple minded some x's..i like even the word time itself, it takes on different directions& thoughts.& unfortunately $talks & is pretty powerful in itself. ppl can get away w/ ish if u have enough $ have more authority & blah blah blah duh & of course everyones in on it..! somex's the most complex things have the most simple answers & sometimes not so much. like there was ever an answer. like ______bout the next president. oh cuz of course u so couldve done way better...yah ok good luck..&sometimes ppl r just cut throat bc some ppl just dont give a f. but its ok cuz the next not give a f'r is probably gonna be in some way b even more brutal..c? & i feel smarter just by even adding my 2 cents here :/

Josh Carr
Josh Carr

Oh yes, I desided to stay english lawbuisness in the us side so go,"A's"!

Josh Carr
Josh Carr

I decided to stay schook and say,"i forgot" still the same old me.

Ibrahim Khan
Ibrahim Khan

Why one economic order for all the nation's?

Eric Jackson
Eric Jackson

Does it involve high school, families, and friends?